Expats are increasingly relying on creaking national health care systems, many facing budget cuts, while foreign nationals without cover are digging into their own pockets to pay medical bills.

Iberia is the area most affected, according to the Association of Medical Insurance Intermediaries (AMII).

Chairman Wayne Pontin said: “There are more expats in Spain than anywhere else. Spain and Portugal are the areas where we’ve seen a gradual decrease in the number of expats taking international medical insurance.”

He estimated the total number of people buying international insurance had dropped five to 10 per cent since the financial crisis of 2008.

Some of the fall is due to a retreat by Britons from their place in the sun. In Majorca, for instance, swathes of holiday villas formerly owned by Britons have passed to Germans, Russians and East Europeans.

In Alcudia, a resort in the island’s north-east corner, a restaurateur told me: “There was a group of 12 apartments round the corner here all owned by English. They sold three or four years ago when their pensions bought less and the euro was still good.

“Now there’s no money. Only the luxury properties are keeping their value – those owned by the Boris Beckers.”

With a million new properties unsold in Spain and unemployment at 24 per cent, it may be thought the bottom of the cycle has been reached. But a “lag effect” could be disguising the true number of expats dropping insurance cover, either to save money or because they have been forced home.

Mr Pontin, the sales development director at Jelf Group, insurance brokers with a major international division, said the scale of problem remains to be measured.

“With private medical insurance, it’s always a year to 18 months later that we feel it. The euro crisis we’re having now will be felt more in 2013,” he said.

“There is a fall-off too in the number of companies that are picking up European contracts – whether short or medium term. There was always a constant flow of people going over for one or two years to various parts of Europe – that’s certainly slowed down.”

Belt-tightening in the international community follows a pattern well established in Britain. Numbers buying medical cover in the UK have been sliding since the 2008 downturn. Then, 12.4 per cent of the UK’s population had medical cover, compared with recent figures of 11.1 per cent.

Sales of health cash plans, a cheaper form of cover, have also plunged. They are more than 10 per cent down on 2008.

However, Stephen Walker, a former AMII chairman, said insurance for expats falls into a different category to UK domestic cover. It was often seen as essential, he said.

“It’s not so much a question of individual expats not insuring before they go abroad as trimming costs,” he said.

Mr Walker, of Medical Insurances Services in Brighton, added: “We’ve had people going to Japan and West Africa in particular who’ve been very aware of the need for cover. Where there is a reluctance, it’s among those going to Europe.”

Stuart Scullion, the managing director of brokers The Private Health Partnership in Shipley, Yorkshire, said people were more inclined to economise than forgo cover altogether.

“You get a very small minority who are going abroad for extended periods who are taking a decision as to whether or not they need, or can justify, international medical insurance,” he said.

“We have seen instances of some who have said either 'I’ll be paying for treatment’ or would gamble on getting into the local care system (even though they might not be entitled to do so). They are taking a risk. France, Spain and Portugal have all thrown up cases.”

He added: “But I’m not aware personally of anyone when they’ve been going to the States who is taking the risk. In the south of France, for instance, you’re covered for accident treatment under the European Health Insurance Card and if it is elective treatment you can come back home. When you’re in the States it’s not so easy to hop on a plane.”

In many countries there is no EU-style emergency provision – and in the US, there are extraordinarily high hospital charges.

Mr Scullion added that those equivocating over buying cover tended not to be those with holiday homes.

“If you are affluent enough to have a property abroad, where you spend six months a year – which is often typical – you’re probably affluent enough to buy cover,” he said.

“The people who can afford a home here and another in Spain want to make sure they are covered for exceptional items and they are not really interested in taking the risk.”

However, that does not mean most are not looking to cut premiums wherever possible. Corporate purchasers of medical insurance are no different in that respect. But there are limits as to what can be achieved in cost cutting by employers because of duty of care legislation and more practical factors, said Mr Scullion.

“Companies are committed to buying good comprehensive cover as part of the package that supports their employee. The current economic climate almost becomes insignificant,” he said.

“For the UK-based company that has to place workers abroad to meet a contractual commitment – such as often arises in the oil industry– insurance provision is built in to the price of the contract. They have to have people in say, Dubai or Nigeria and they have to provide them with health care.”

Clearly, freelance workers abroad should insist to a prospective employer that medical cover with an emergency evacuation benefit is provided. He or she should check that this is written into their contract of employment, said Mr Scullion.

'Don't worry', expats in Greece told

Expats in Greece should not be too concerned about settlement of claims if the country quits the euro, according to the AMII.

Chairman Wayne Pontin said: “There’s going to be a bit of system adjustment if we suddenly go to drachma. But most providers can settle claims in any currency. Anyway, many claims are settled in American dollars, as opposed to euros.”

The main UK-based insurers in Greece are Bupa International and Axa PPP. Bupa says it has already geared up to face “every eventuality in Europe” while Axa is similarly placed.